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Windjammer Barefoot Cruises -- The End of an Empire Part 4

| Tuesday, 05 Mar. 2013

Part 4 of a 4-Part Series

11-23-07

My Personal Experience with Windjammer Cruises

Note: as more information seems to be coming in daily I am publishing all of these articles now. Some areas of parts one and two have been updated. If you would like to comment, please go to our message boards here: Windjammer Message Boards

Since my first professional cruise line experience 25 years ago I have seen a few cruise lines fail. The pattern is quite predictable.

First the line alienates the travel agents as commission checks get later and later. Next come the crew issues. Passengers return from cruises with rumors of surly crewmembers talking about how the ships are falling apart and paychecks are late. The third step is cruises being cancelled due to maintenance issues with the line making up for the cancellations with vouchers for free future cruises. The last straw is the announcement that ships have been seized and are anchored with no money for fuel, the crew stranded.

When I found, in late September, that this Windjammer story was already at stage four. I wrote a quick essay to our readers saying, "all signs indicate Windjammer is on its last legs, we at CruiseMates recommend that no one purchase a Windjammer cruise. There is a good chance you will be left holding a useless ticket."

Little did I know what I had in store for me.

In response to my first article article, Joey Burke contacted me and said he wanted to speak to me by telephone. I agreed to take his phone call. At the time I did not really know anything at all about the Burke family. I had not even seen the "Flotilla" message board, so I had not read any messages there. When Joey contacted me, I went to the Flotilla for the first time, but found I had to register to read the most important threads. I registered but I was told I had to await approval. Before I was approved, I received the Windjammer phone call.

Susan Burke This is where I must refer to the beginning of this article where I fully admit that as a journalist, I was naive. But in my defense, little did I know with whom I was dealing. I believe people in public positions giving interviews know any misrepresentation of the facts will be quickly revealed once an article is published, and by the way, intentional omission of relevant information in the same thing.

Instead of the call I expected to receive from Joey Burke, his sister Susan Burke called me, saying she was calling at Joey's request who was too busy and emotionally drained to deal with more details. We had a long conversation, which I will relate to you now because I believe it probably represents the "best line of defense" in the Burkes' thinking to justify all of the recent moves they have made.

I asked her how things got so bad with the condition of Windjammer's ships. She told me about the family squabbles and the tragic loss of her brother, Danny, which she said had caused the family to lose focus. She indicated that things simply went downhill when they weren't looking because they didn't have anyone "they could trust" working ship operations.

I asked her directly, "who owns Windjammer Cruises?" She told me the company is in the hands of a trust, formed on the Isle of Man by her father, headed up by a lawyer and administered by a board of directors (without much direct involvement). As far as I can tell, all of this is accurate, though I think it would have been far better if she had explained to me how the business is actually comprised of many separate businesses that each perform different functions.

My next question was more pointed. "What financial liabilities does Windjammer Cruises have that would prevent it from getting on its feet again?"

Her specific words were that the company had practically no liabilities; the crew has all been fully paid, all ships were free and clear. The only liabilities were "a few vendors who are very understanding." Perhaps she assumed I already knew about the LaMer or Sail 5 and Sail 10 programs when I asked her about the people who had paid for cruises who needed to be rescheduled. (I knew nothing about them, and hence did not ask about them). She replied that past cruises were all "no problem, they are already being taken care of on the Legacy". I was left with the belief that the liability for unfulfilled cruises were limited to late August through September 2007.

I asked her why cruises were being cancelled. Her implication was that while the company had actually been making efforts to provision the ships, there were crew members who had become uncooperative and were telling passengers that cruises were cancelled instead of doing their jobs. Meanwhile, the reason provisions were sitting on the decks was because while they had been delivered the crew was refusing to load them.

I asked why that was happening if the crew had now been paid. She replied it wasn't happening anymore. "The Legacy is sailing now" she told me on August 30.

Okay, crew sit-down strikes are unusual but not implausible. So, I asked Ms. Burke what future plans the company had for getting the ships up and running. "Looking to hire new people?" I asked, "Possibly," she replied. She told me the ships only needed refurbishment, which was currently being done in Trinidad. She continued that the entire company was actually hopeful that the ships would be ready as soon as February 2008 rather than the announced April date. She said "The Legacy is sailing right now (this was 10-31) and it is also scheduled to keep sailing with cruises scheduled for November 3, and November 10.

I asked her why the Windjammer web site was so hopelessly out of date. She said their computer person had just quit and they didn't have a chance to find a new one. Without saying outright how bad it looked to be selling cruises via a web site so obviously full of incorrect information, I even offered to fix it for them for a very reasonable flat fee. (At the time I was still thinking she was being honest with me, and I was actually trying to help them out). I said for $1000 and I would bring the Windjammer web site completely up to date with all the accurate information she could supply to me. She said she would let me know the next day. I never heard back from her.

The only area where Susan did not mention having any problems was in handling sales operations. I now realize sales is her job. No problems where selling cruises was concerned. Simple enough, the problem was getting the ships sailing again for all those cruises they sold.

The only other thing she alluded to was what she said was a problem with the Flotilla message board. She said that there were people on that message board who actually wanted Windjammer to fail, because they had purchased a sail ship themselves and already had plans to hire one of the Windjammer captains away and compete directly with them.

End of conversation. I went and wrote up my second piece which I now disavow. Reaction to the article was almost instant.

What I Know Now My problem now is that this story is unfolding faster than I can write it. I thought nothing would surprise me any longer. I was wrong again. After being completely assured by both Joey and Susan that the Legacy November 3 cruise would sail "no matter what," two days later Joey left a message on the Flotilla boards that the November 3 and 10th sailings of Legacy were both cancelled.

Did Joey contact me to tell me he was canceling those cruises he and Susan had just touted to me so convincingly? No. I read about on the Flotilla, the same as many people who were booked on those sail dates. By November 9, some people booked on the November 10th date still had not been notified it was canceled. Those people were urged to change their plans to the Nov. 17th cruise. But on November 13th, the November 17, 24 and December 3rd cruises on Legacy were also cancelled.

And so the pattern repeats itself. As the former company insider I later spoke to said to me, "They live by a strategy I call the 'ultimate scapegoat.'" One family member can promise anything based on word of mouth, and if that works out for the Burkes, they are happy. When it backfires the answer is inevitable, "See, I had good intentions all along, but it was my family who backed out on my word to you."

Joey said something else to me in his email. He said "I really wanted to sail the Legacy on November 3rd, but I just couldn't raise enough money for fuel and food."

I am now thinking, "Here is a cruise line that owes thousands of cruises to prepaid customers, and they can't raise enough money for one cruise? Do they really expect to revive the entire cruise line by bootstrapping the company one cruise at a time?"

I wrote back to him to question how he could say he couldn't raise enough money for food and fuel for one cruise when people know how much personal wealth the Burkes have. I told him I wouldn't even mention he said that because I realized Joey has a way of saying things he shouldn't. I didn't mention it, until now. Passengers were flying down to Costa Rica on $1000s of non-refundable air tickets for scheduled Windjammer cruises only to be told they wouldn't be getting a cruise after they arrived, and the Burkes weren't saying much more than "sorry 'bout that."

My shock lasted for all of a week. Then I got it. Messages from the Burkes in the Flotilla boards are full of pleas for understanding and patience from their faithful customers, not to mention asking for them to buy future cruises now in order to save the company. Yet not one Burke family member will put in a red cent to save the cruise line even when their customers are losing money on each cruise they cancel at the last minute.

Could it be they realize that as long as they say there are cruises scheduled they have not officially defaulted on their timeshare or Sail 10 customers? Possibly. Is it also possible they do not want to set a precedent of putting in private money because it means the labyrinth of protected, offshore corporations could be pierced in the same way the IRS did CB back in 99? Possibly.

And what about this practice of using the Flotilla, a privately owned, non-official Windjammer devoted message board, as their primary way to contact their customers? Wouldn't that be a little like a professional catering company depending on their neighbor's kid to do their grocery shopping? It just doesn't make sense. Except in one way - they can't afford (or are just too cheap) to fix the official Windjammer Web site. Or maybe they really want to have a place where they can state Windjammer policy and someday disavow it by saying, "Well, the Flotilla is not an official Windjammer Barefoot Cruises Ltd Web Site."

To this day, I honestly don't know if the Burkes are cagey, or just naíve. Their "just trust us, we're really lovable people" stance works very well on some Jammers, but meanwhile other people who have already pre-paid for several cruises they will probably never see are just mad. These are the people Joey should be worried about, yet these are the people who are being virtually ignored.

Liabilities of Windjammer Looking at financial liabilities, I noticed that the company that used to sell timeshares for the LaMer project is still online. The homepage of Cruiseshares300 no longer mentions Windjammer, but the pages about LaMer timeshares are still on its web site if you use Google. That is how I found Barry Jones who still runs the company.

Michael Burke Jr. is long gone from that business, and in truth Barry never mentioned MDB by name, though Barry was a fan of CB, the captain. Barry's company Cruiseshares300, is still in the cruise timeshares business -- just not Windjammer timeshares.

What I now know is that most states, including Texas, have no laws governing timeshare sales, but Florida does. In Florida, a timeshare owner would have preferential rights over people who purchased single vacations on the same property and were not able to take them. Timeshare sales imply a partial ownership and legal claims to the property according to Florida State timeshare law.

Although Barry would not say how much money Windjammer sold in timeshare sales alone, he does believe those buyers could make a legal claim to the ship LaMer based on Florida law, whether they know it or not and despite a contract which mandates arbitration. He believes the total amount of liability is sufficient to make it a significant hurdle to finding a new financial backer for Windjammer who could make good on all outstanding company debt. Essentially, the only way to accomplish that, according to Jones, would be if all of the timeshare owners collectively voted to a settlement, possibly in partnership or in agreement with someone looking to buy the company out.

As a friend of Captain Burke Sr. and a fan of the LaMer project Barry was very impressed with how it worked out. "It was a good plan and a successful one," he said. The problem, he says, was the Burke kids usurping the sales proceeds from it instead of leaving it where it belonged.

"That is not normal procedure for timeshares." Says Barry, "and that could be a problem for Windjammer as they are based in Florida."

Jones says he is sorry it happened that way, because now Cruiseshares300 does not know where that money is. Jones fears he would be but one in a long line of creditors waiting to recover should Windjammer ever show any real assets.

When asked about the Sail 5 and Sail 10 programs he said, "Another successful program, but I doubt they have the same rights as the timeshare people." Jones even has doubts as to whether it is legal to pre-sell cruises on a foreign-flagged cruise ship. I noted that while other cruise lines do have time-share models, no other cruise line has a pre-sell cruise package of which I am aware.

When it comes to liability, according to Barry, the fact that the Windjammer ships are owned and flagged overseas is no protection. Every nation has admiralty courts and one could seize any of the Windjammer ships at any time. Then the creditors will be standing in line to collect. The only reason they have not yet been seized is because their intrinsic value does not add up to the liabilities, especially after a class action lawsuit for the LaMer timeshare buyers.

Meanwhile, the timeshare owners feel their chances of getting the cruises they pre-paid for are more likely to materialize if the cruise line can rise from the ashes, while the individual proceeds from a class action lawsuit would likely be miniscule.

It's a classic standoff. Everyone is waiting to see if Windjammer will one day be worth something more than the current net value of the ships. Meanwhile, no one, including the Burkes, will do anything to try to get the company to that place for fear any capital invested would be eaten by lawsuits.

Speaking of the Burkes, word is that June Burke (CB's wife) set up a new trust for CB, and it is completely off-limits to his kids with all his money going to his grandchildren. If CB were speaking he would probably say, "my kids dug their own hole, let them dig themselves out." Unfortunately, the kids are too busy fighting to do any digging.

Today, Joey Burke is still listed as a principal officer and director of Windjammer Barefoot Cruises, Ltd. a BVI (British Virgin Islands) corporation licensed to do business in Florida. However, Joey himself has posted in the Flotilla that his personal wealth is indeed very small, alluding to boarding horses and having an income just over $20,000/year. My former insider contact says that Joey has made plenty of money in the past, however, if his primary source of income in the past was provisioning Windjammer ships, then he probably is scraping the bottom of the barrel now.

How much are the ships worth? "About $6 million, maybe, if they were in good shape and unencumbered" says Barry Jones, "not counting the LaMer." Apparently that ship has some real potential value. The problem is no one knows what kind of shape it is in since it hasn't sailed commercially since they acquired it. Meanwhile, a former member of the board just emailed me to say he believes the company's outstanding liabilities are in the neighborhood of $12 million.

Where We Stand Now I do have to wrap up this article at some point, though the truth is this story continues to grow.

Joey Burke just announced a new "breakthrough" deal to "save Windjammer once and for all" on the Flotilla. The deal says two of the ships will be sold away, to a "creditor," and that money will be used to refurbish and save two of the other ships for Windjammer cruises.

Oddly, one of the ships he says he is going to sell is the LaMer ship, which is tied to the timeshare sales for which Windjammer still has obligations. Furthermore, the creditor at the other end of the deal is none other than his brother Michael Burke, who many people allege made off with the Cruiseshares300 sales revenue originally.

In announcing this breakthrough deal, no mention was made of the LaMer timeshare obligations.

The next day, just as cryptically and unquantifably as the day before, yet another message was left on the Flotilla message board. It amounted to saying, "disregard my previous announcement" since his lawyers had advised Joey not to "discuss investors, not to discuss family and suggested I reconsider selling future cruises on the Legacy."

His lawyers are saying, "reconsider selling future cruises on the Legacy?" There are already dozens of cruises already sold on the Legacy as it is the last operating ship the line has. What about those? No mention was made.

He then says "Perhaps they will come around and see my plans as what is best for Windjammer. But I can't proceed to articulate, work and expect you guys to support me or Windjammer if I am not being supported by the trust."

"Arghhhhhhhhhh," and I don't mean that in the "matey" sense! I mean the pattern only repeats itself ad finitum/ad nauseum like a hamster running in a turnstile cage. Make a promise, and then back off by blaming it on your associates. The ultimate scapegoat theory.

And still the Jammers in the Flotilla stand up for Joey; still hoping he can resurrect the cruise line. It's better than the alternative, declaring bankruptcy and packing in all hope, apparently.

And this could be the biggest wrinkle yet. Florida is one of the few states that requires travel agencies to be certified to sell cruises. Windjammer let their certification lapse, but apparently caught it in time not to incur immediate repercussions. However, the Florida statues are very clear cut about what Florida-based travel companies can do, and selling any travel without the clear proof that you can fulfill your promise to the buyer is frowned upon, to say the least.

Where Do I Stand on the Issue Now? When the Nov 13 shoe dropped that the following three Legacy cruises, November 17, 24 and December 3 were canceled it meant they have sold and then subsequently cancelled five cruises on this ship alone in the last two months.

I have subsequently been contacted by a man who says he was placed on the board of Directors on May 22 to try to help sort the entire mess out. He writes;

"... the current fraud is that they are knowingly collecting money for cruises they cannot under any circumstances deliver. To wit: no money, no insurance, accumulated liabilities in excess of $12 million, they have lost their flag state status - this is to say, the ship operating company has been de-certified and the ships simply cannot sail legally under international law."

"Two of the ships are under arrest, one of the ships is most likely unseaworthy - leaving only the Legacy as potentially viable."

"While TimeShare promises have been made for 10 or more years, only the Legacy would be compliant with the 2010 SOLAS Regulations. The other vessels could not operate."

"Are you aware that the last TimeShare sale was made in Oct 2006? And that a Windjammer letter, signed by MDB, went out in July 2006 to the TimeShare buyers detailing the progress that was being made with La Mer and the overall project?, By the way, there were 646 Time Share sales in total."

( end of message ).

Someone left a message in the Flotilla that they had a group of 20+ people booked on the Nov. 17 cruise. Word is she got her cruise documents and cancellation notice the same day, and that she had independently arranged air tickets. Another lady who flew down for the November 3rd cruise was told it was canceled after she arrived. Although Windjammer said people who flew down could sleep on the ship, that was disallowed by the local authorities. She posted to the Flotilla from her hotel, saying how nice it was to see the ship in the distance. She had plans to fly down again for the 17th cruise, hoping that cruise would "be the one." It won't.

Since there were so many credit card charge backs the banks shut down Windjammer's commercial accounts, so if you want to buy a cruise you can do it with PayPal (the web-based money transfer service owned by Ebay). It is not easy to get a refund from PayPal however, and keep in mind that third party travel insurance carriers stopped covering Windjammer months ago, and a Windjammer travel policy does not cover "company financial failure" as a reason for a refund. Also, that Florida Seller of Travel law prohibits a seller from favoring one payment method over another unless there is a specific reason (such as a promotional discount for a new Visa card, for example).

Also a problem with the FL Travel Sellers law is the Windjammer Web site http://www.windjammer.com. It is still up, alive and well and looks as if you can schedule a cruise on any ship at any time, noting that all four ships have cruises scheduled through April 2008. The link called "The Fleet" shows four shiny ships. There are links to wedding planning, etc. The only page that does not work is the one for making reservations.

In truth, none of the ships are currently sailing. But the web site also shows no indication that there are problems with company except one cryptic press release canceling the Legacy Nov 3 & 19th cruises -- but they hope to be up and running on the 17th once again.

My Outlook? I have been wondering why the Burkes have not filed for bankruptcy for Windjammer. Unless they are willing to reinvest in it themselves (which doesn't appear to be likely) or they find a way to unencumber the ships and get a new backer, I don't see any changes coming. Especially troubling to me are the ongoing cruise scheduling and cancellations. This last letter was a blow to Windjammer believers, but just a matter of time to those of us who really started watching this story a few weeks ago.

If the line files bankruptcy, it is possible someone could buy the ships and the name "Windjammer" and sail on with the same model. Unfortunately, I believe most of the Sail 5, Sail 10 and LaMer investors would get the short end of the stick.

But I certainly see little reason to continue on as they are. I get frankly very upset when I see people writing into cruise message boards from Costa Rica because they flew down there only to find their cruise cancelled with no warning. Yet, the Burkes seem content to continue acting is if none of what they are doing to their customers is a problem.

There is a web site for consumer complaints full of stories of people who spent as much at $18,000 on LaMer timeshares. These people do not appear to be the idle wealthy. They are regular folks who work hard for their money.

The web site is: http://www.consumeraffairs.com/travel/windjammer.html

Personally, I ardently urge people not to count on future Windjammer cruises. I advise everyone not to give this company anymore money.

Link to: Windjammer Barefoot Cruises - Part 1 Link to: Windjammer Barefoot Cruises - Part 2 Link to: Windjammer Barefoot Cruises - Part 3

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